Postal Worker Health Care Reform Would Shift Billions in Costs to Medicare
Going Postal

Postal Worker Health Care Reform Would Shift Billions in Costs to Medicare


The government would save billions of dollars in health care costs for federal employees and retirees under a U.S. postal service reform act pending on Capitol Hill, although much of the long-term “savings” claimed by advocates may be achieved by massive cost-shifting.

At a time when Congress and the Trump Administration are looking for ways to restructure government to reduce overall costs, the legislation would use a complicated bookkeeping maneuver to shift postal workers out of the government-wide Federal Employees Health Benefits plan into a separate new Postal Service Health Benefits program.

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The idea apparently is to remove postal workers and retirees — who generally have greater health care costs than other workers because of the physical demands of their jobs — from the larger pool of federal workers to gradually reduce the overall cost of health insurance for the workforce.

Active postal workers would receive their health insurance coverage under a new program established by the U.S. Postal Service while postal retirees would be required for the first time to enroll in Medicare for their health care and subsidized prescription drugs. Medicare would pick up most of the costs while the new postal insurance program would cover co-payments and other deductibles.

A recent analysis by the Congressional Budget Office (CBO) shows the legislation would result in an increase in direct spending by Medicare, the premier health insurance program for seniors, totaling $10.7 billion between 2018 and 2027.

By pursuing this approach, the government and federal workers remaining in the FEHB program would see their costs and premiums decline over time, CBO claims, while the Postal Service could begin to rein in health insurance costs by offloading a substantial portion of their operating cost to Medicare.

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Without predicting the savings that FEHB enrollees could claim under this new approach, the CBO estimated that the government’s portion of premium costs would decline by $1.9 billion for current employees and $1.4 billion for federal retirees over the coming decade — or a total of $3.3 billion.

Similarly, CBO did estimate the savings for individuals who shifted to the new postal service insurance program but projected that the postal service would save a total of $4.7 billion over 10 years under a new postal-specific health care program.

For the first time in several years, efforts to overhaul the Postal Service and its health insurance programs has won the backing of Republican and Democratic lawmakers and nearly all of the key stakeholders, including the American Postal Workers Union, according to Government Executive, which reported on the CBO analysis earlier this week.

However, the National Active and Retired Employees Association has vigorously opposed the legislation, arguing that the 76,000 postal retirees who would shift from a federal employees program to Medicare would be hit with unwelcome new costs.

The group estimates that the current $134 per month Medicare Part B premium for physician care would exceed any savings retirees might hope to gain by changing programs. Richard Thissen, president of the association, has argued that “After finishing long careers with USPS, postal retirees should not be threatened with the loss of their health insurance entirely if they do not buy additional coverage through Medicare.”

The headline on this article had been corrected to eliminate a reference to the postal workers' union.